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157-10014-10125

MISCELLANEOUS RECORDS OF THE CHURCH COMMITTTEE

07-M-31

Document Information

SSCIA

03/10/1976 , ‘
78

SSCSGO, METHODOLOGY
COMMITTEE BUSINESS

TRANSCRIPT
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03/22/2000

CCBOX 324

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DOCUMENT INFORMATION

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03/10/76 .
78
SSCSGO, METHODOLOGY

~

COMMITTEE BUSINESS

TRANSCRIPT
TOP SECRET
REFERRED
POSTPONED IN FULL
01/05/99

CCBOX 324

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{R] - ITEM Is RESTRICTED

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. Unauthorized Disclosure: Su
‘to, Criminal Sanctions.

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waRO/emml | TOP SECRET 2

1 . FOREIGN AND MILITARY SUBCOMMITTEE MEETING
2: | eee
3. | Wednesday, March 10, 1976
; - a oe : —— a
5 | . ; - : United States Senate,
6 , , _ Select Committee to Study Governmental
va | Oo . - Operations with Respect to
8 . oe Intelligence Activities,
9 a a . a Washington, D. c.
10 7 The Committee met, pursuant to notice, at 2:45 o'clock.
114 p.m., in Room S-407, the Capitol, ‘the Honorable Walter dD. a
. 12 | Huddleston presiding. | —
> 13 ||. Present: - Senators Huddleston (presiding), Hart of
14 ||. Colorado and Mathias. | i | |
- . i
1S: Staff: William G. Miller, Staff Director, and David»
“16 ‘Aaron, Joseph diGenova, Lynn Davis, William Bader, Elizabeth
“a9 Culbreath, .Charles Kirbow, Rick .Inderfurth, Pat Shea, Elliot .
1g || Maxwell and Al Quanbeck, Professional Staff Members,
19
20
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23 7
-_ 24 |
25

TAR Seeper

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frequently do, say, let us reserve. this for the permanent

all the information we need.

working all right under , the set of regulations.

TOP SECRET 7

And then the question is whether or not there is a prohi-'
bition on printing in the English language.

Mr. Bader. And as I heard the consensus this morning,
we would not move: to that recommendation ° ‘for a prohibition.

I did_ not hear whether on the distribution this would be by.

law, though | I took it it was to be by law, though I. can be

corrected on that. I don't) think we addressed that this mornin
. Mr. Kirbow. Mr. Chairman, on these that we considered
to be rather. -- that we have a fairly light record on or that

we are not ‘too sure what the future holds, one of the members

“that I rode over with on | the car - suggested that perhaps. inf those:

KO

instances we could recommend fairly strongly whatever we want
the followon people to do to ensure that the recommendation
does not create havoc within the Agency or does not leave the’

rights. of citizens unprotected.

But that is not a cop out. It is something that you
oversight committee or for whatever other group. We may have

Senator Huddleston. Let them make the determination whether

or not it-should be a statute.
. t . .
Mr. Kirbow. Determine whether in the law whether it is
|

Mr. Bader. Mr. Chairman, may I say in this instance in.
the publishing trade there is no lack of record? The evidence

TAR CLARE

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Senator Huddleston. ‘I call the Committee to order.
Mr. Aaron. . r believe ‘Bill Bader had the temerity: to
summarize where we stand.

Mr. ‘Bader. Mr. Chairman, where I. think ‘we are at the:

moment is. taking the three major issues before the Subcommittee
in the order they were presented, ‘and discussed this morning,

the first being the academic issue, and as I heard the Subcom-
mittee this morning, then -I will have another go at. the
options, give enough options in the option paper and bring. it
back before the committee for a further look before we go gn. 2

Senator Huddleston. By Friday. | |

Mr. Bader. By Friday, without / question.

I think by this time we will all have -- we will try to
include. a. . positive. ani that is to. say,. to. approve’ if not.
applaud. the . expanded . efforts. of FRD to. undertake these activi- |
ties, or at .least .to endorse .them.

Now, going to the second was the covert use of books and .
publishing houses. We discussed two recommendations: one whic
I believe here the Committee has agreed to, and that is a
prohibition on the distribution or subsidy of any books,

magazines ‘or other publications not attributed’ to the CIA in-
|
side the United States.}

|

Senator Huddleston. I think we can all accept that, can't

we.

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and inquiry into it has: ‘been thorough, and I think we know this

12 |

_ how we are moving to --(r would ‘also reiterate that in our.

ice SECRET | 4
| | _

well. There is no dispute from the Agency.
“Senator Huddleston . Well, is the law inconsistent with |

the statute on. the information service?

fi

Mr. Bader. It is the same thing. I would recommend,
Mr. Chairman, that this would be by law, by statute.

Senator Huddleston. .On the publication.

Mr. Bader. On the publication.

. Senator Mathias. I would support that.
;

Senator Huddleston. r think Gary Hart would also, so 1

think we will make that ‘recommendation, that this one on the -

. . a , . . ae Boe
academics is the one we are. not sure of..

Mr. Bader. . That? ‘Ss ithe one we would go forward with, and

session the other night, I took it as agreement that the

recommendation by statute the CIA should be prohibited from.

making operational use of all educational and cultural -.
: \
grantees of all U.S. Government sponsored programs, this was th
:
issue’ which was raised of government funded. programs such as

the Fulbright: program. 7

‘senator Huddleston! And that's either already a regulatio
or a directive or something to that effect.
-. Mr, Aaron. Certain categories.
Mr. Bader. Certain categories.

Mr. Kirbow. That is brand new ground.
TAR CEE.

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TOP SECRET os

1 . Mr. diGenova. The John McCloy exceptions’ to that rule, they
2 || are the only ones that are protected.

3 _ Mr. Aaron. “That justifies Charles' view that there are

4 some similarities between Ford Foundation and Government

5 sponsored activities.

6 Mr. Bader. Where our discussion was left before lunch

7 {| was on the question of the covert use of U.S. journalists and

8 || media institutions, and as it was laid out, it was indicated

9 that. the CIA's intended internal prohibition on ‘the use of the
10 media extended to the internal prohibitions on the use, opera-
ll tional use of individuals, ‘American and foreign, who were bos
412 accredited to Ametican media. organizations, |
eg “13 : As I heard it this morning, what we were discussing and
14 moving to was to extend that prohibition to ‘cover all American
15 individuals and media | organizations, and ‘that the question then
“46 was whether this would be recommended to be something done in’

“497 law or a recommendation, or. an insistence, “it you will, to the.

18 Agency that it further amend ‘its “internal directives, its

19 50-10, to put all media personnel, American media personnel on
20 || the prohibited list, and that is I. think where we were.
91 Senator Huddleston. I think that's an accurate statement.
22 | That's where we were. .
23 7 I had expressed a thought that 1 thought that it ought to
te! 2A be expanded to include all, but we should hold off on the

25 statute business for the time being.

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TP SECRET 6

1 Senator Mathias. My role here seems to be the Devil's
2 || advocate. | | _
3 fe 7 Senator Huddleston. Good.
4 | Senator Mathias. There is no question about the writing
5 American press or the value in print domestically. Maybe the
6 role, any legitimate role that news men’ could, journalists,
va writers could fulfill is available through the information
8 agencies, USIA and groups of that sort. |
9 | _ So does anybody know whether there is any real need
10 | for allowing some latitude, which is not covered by situations
11 that can be envisioned under USIA or other programs? é
. 12° Mr. Kirbow. Well, Senator, the one that I discussed barlidr
oY 13 that I probably didn't make my point well because no one |
14 || seemed to have picked it up, is we do, by the words here, if I
“415— understand Mr. Bader, prohibit an American citizen living in |
16 Brussels and working for a local newspaper there from having 7
“49 “anything to do with the CIA. — | |
1a ll. Senator Huddleston. No we don't, do we?
19 You mean -by his extension?
20 _ Mr. Kirbow. Yes, sir.
21 : Senator Huddleston. But not by --
“p29 || Mr. -Kirbow. But wasn't that what you wanted to put in
23 the law, that you didn't know if you wanted i
‘ 24 Senator Mathias. ‘This is the point I wanted to raise

‘os || here. ;
| A eT ee

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' Mr. Kirbow. That kind of relationship is something that

we should stay away from because I. don't see any harm in it,

nor do I think the record demonstrates. _any harm in it. I don*t
see ~~ I don't know how in the world this person “doing that.
taints thacminds of the American reading public, which is
apparently what you are trying ~~ you're not trying to protect
the newsman. You are trying to protect the reader who doesn’ t
know that. what he's getting is being spoonfed to him from the
CIA, and I don't know why we would be so concerned about
protecting newsmen from working, or prohibiting them from |

working, because I think they have a right to. do that as

wee

ye ae

American citizens, just as they do to work with the Department
of Defénse or any other agency «
Mr. Bader. You would then rescind the “Agency' s standing
prohibition? | |
Mr. Kirbow. I just don't think you ever prohibit it in
law. . | | | |
Mr. diGenova. Are you talking out an affiliated,
accredited journalist, because that's what -the Agency regulation,
deals with. ‘It doesn't deal with an American citizen. It
deals with an accredited person, whether: he is a foreign |
national or an American.
Mr. Bader. . To an American media organization,.
Mr. diGenova. But that's not the example Charles gave

you. a
TRA CFfeR PP _

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Mr. Kirbow. Well, perhaps I misunderstand the extension
that you, your full recomendation. |

Do you want to go beyond where the administration is in
their position?

Mr. Bader. I am recommending to go beyond where the
Administration is at this stage, to extend ‘the operational
prohibition on hthe part of CIA to use American == americans in
the media --

Mr. Kirbow. Wherever located.

Mr. Bader. Where they are using them undercover, at this

stage, to the extent that it is a cover ‘proposition.

pane, .

Senator Huddleston. Even if they are in “foreign media?

Mr. Bader. Yes, sir. | |

Senator Huddleston. And even though all of their
activities are related to foreign; they are not writing for .
American news services.

Mr. Bader. Alternately,’ they could be with American
media organizations. .

| Mr. Kirbow. Mr. Chairman, I don't think there is a single

shred of evidence on our record that that is in any way wrong=
doing or in any way: adversely affects the rights of American
citizens. Clearly it will prohibit or could prohibit in the
future the proper use of an individual. that could be essential
to the intelligence collection processes of the CIA, and it

singles out a specific agency which is not doing any harm to

HW 50955 Docld:32493513 Page 11


TOP SeCRET 9

1 the American citizenry, and says no, you cannot do this because

2.|| you happen to be a secret organization.

3 |. Senator Mathias. If I wanted to.do it, Charlie, I think
4 I could work out a scheme. I would hire a prominent American
5 || columnist to go and live in Paris, as Art Buchwald dia, for |
6 example. | |

a Mr. Kirbow. And to pick off his columns and run them
g | in the New York Times. 8 | :

9 - Senator Mathias. And run them in the Paris Trib first,

10 | and then let the domestic press pick him up."

ti. 00:é«M@«w Kirbow. | But if he's in the paris trib, that's ay .
“Lb affiliated U.S. -- |
a“ 13 ur. Aaron. © Well, suppose he writes for the Financial
14 Times?
15 - Senator Mathias. Well, you could work out an echo program

1

a6 | if. you wanted.
uy | Senator Huddleston. Well, the basic point; instead
us | of picking instances, it seems to me, is whether or not as an
19 official policy of the united States Government we want an
-20 institution such as the press with all it means and all it is
21 supposed to be in. American with its constitutional provisions a d
a9 whatever, to be subverted to the secret, clandestine operation
“-.92 || that it can; Anytime we put any prohibition anywhere, we are
as . 24 eliminating . somebody as a potential agent. You can't use
a5 that as a guideline. -
. A ee

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TOP SECRET |
i 10
~ 1 Mr. Kirbow. These people are not necessarily subverted.
. 2 _, Senator Huddleston. I'm talking about the institution of
3 ||the free press being subverted, not the individual. |
4 | Mr. Kirbow. I'11 extend that one further. I don't gee
5 how using them for cover, which has. no direct effect, like the
6 example I-quess you gave, senator, of a vice president of a
7 || bureau of some sort who has nothing to do with the writing or
8 editing or ‘anything; he is the business head of the operation
‘g | just like any other corporation. This thing extends to that.
10 ; ' Senator Huddleston. He may have something do ° with the.
41 | Selection of the , people who do write. oo . ¢
12.1 Mr. Kirbow. Well, if you could give us an abuse that*we
- | 1s are trying to correct, oF some reason for it?
14 Mr. Bader. It's not a question of abuse, it's a question
15 of the use, the operational use of an institution such as
16 the press for operational purposes. |
7 Mr. Kirbow. well, explain then, and perhaps I'm going -~
18 explain the sanctity of. the press if dt is not ‘to ‘protect an
49 uninformed reader from having his mind tainted by the relation~
oo ship. What is the sanctity of the press as an organization?
21 It is 5 not sanctity like the church and state. I just-don'
22 || see the record for this. . . | .
- . . 23 Senator Huddleston. Well, the Clergy and the press I thin
a 24 || are institutions. | | |

25 -° Mr. Kirbow. Well, I think the. clergy and maybe the
| . TAR fer eT | .

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but a businessman who happens to have elected going into the -

business of running a newspaper or a magazine, to be singled

-you should do it with the whole United States Government. I ae

13-

Or Secret u

academic, like you say, that teaches the student directly,

out and say you as a patriotic American are proscribed against

doing any business, and if you are going to do it with an agency),

don't see how we can single out the CIA and not single out
military or FBI. |

Mr. Aaron. Well, I think the domestic group will have --
may well, have some :reconmendations regarding the FBI's covert

V.

use of American media.

dpe oa

Mr. Kirbow. Well, domestic media, obviously.

Mr. Aaron. f would! like to say, to take Charles'
example of an American working for a foreign press, and what
the problem is. I think’ the problem. is that you have two
kinds of problems with the press. one is the fact, if it is
operating domestically, if it is working for American media
institutions, it is clear that they are subject to some:
manipulation or at. least questionable manipulation, and there
are issues in people's minds as to its integrity. .

Now, the question goes beyond that to what about people
who might be working for some foreign ~- American journalists,
American writers or what have you, working for foreign media
institutions. There you have a somewhat more extended

situation. But it seems to me that what you have is the
TAR CFepeyT.

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‘of a clandestine intelligence organization.

American people having the right to spy, somehow, and these

a

any real operational use that you want to preserve, and second,

‘a difficult extension in that example, as well as the possibili

TOP SECRET 22
- po
possibility of the American press getting discredited, having

problems of being able to perform its normal functions in the

world and performing’ in’ the United States because it is part

Mr. Kirbow. Don't you think that's an individual right
that a person has the right to exercise both ways, instead of |
one way? | |

Mr. Aaron. | Charles,. what I think I have told the

Committee, . I have a real - problem with the concept of the 7

prohibitions don't go to what people are allowed to do on ¢
the outset. They go. to what the Government is allowed to Ago}
“Mr. Maxwell. Well, bee s take a different kind of
example. | |
‘What would happen if in ‘some way -- and it! s. not, I think,
impossible to imagine “ian American citizen was writing full
time for the Communist Party paper in Italy or Portugal or
France. = | | |

Now, that, obviously would be covered by the example that

Bill has provided as a prohibition..

There are two questions. One is whether the person has

whether it goes to the question that David presents, which is —

the possible contamination of the American press, which seems

TAR fee per

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.argument, because the argument about distortion of what goes ©

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T*)P SECRET |
: . . |
of distortion, the flowback problem in America,
And the ‘second problen seems to he, with an example like

that, is that it seems to ~= there: is very little stock in the

on in foreign countries and people's perceptions is at the heart

of the question of whether the CIA or any government agency.
should be engaged in- propaganda, because it is quite possible
the propaganda gets picked up in the same way, and the question~
is obviously of line drawing: how do you want to draw the
line, | |

at strikes me that there may ‘be better. ways to draw the a.

coe Abe

line than the suggested prohibition that Bill has for any — ¥ —
American, regardless of Leatus, or who they write for or what. ;
they are doing. |

Mr. Kirbow. By having citizenship as an American --

Mr. Bader. Well, you misunderstood me. . I was putting out ;
the various possibilities. | |

Let's turn to the text for just a moment and maybe that
will help. |

First turn to 61. Let's try to get some idea of what the
problem is before we get to the semantics of it. All right, - _
just let me go through this, then'we'll see what is actually .
being recommended here.

I have confused you, obviously, by « giving a series of

possibilities, not what the recommendations are. |
TA A Fer ee.

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~ 1 | “Ten U.S. news organizations and five U.S. publishing
; 2 houses provide cover for CIA agents abroad. Four of the
3 organizations do not know that they provide this cover."
‘4 ' Then there are some examples. -
5 | Mr. Kirbow. Meaning management. or individual?
6 | Mr. Bader. Management. |
7 Mr. Kirbow. At any level.
8 ' Mr. Bader. At any level. .
9 Mr. Kirbow. All right.
LO | - Mr. Bader. Then there are come examples of the kinds of
lil relationships that the CIA officer engages in intelligencd)
‘12 ‘collection under cover as a roving international news corres-
—_ .
Y 13 pondent, a CIA officer under cover as a European representative|
14 of an, American company while working asa stringer for a
‘15 || United States publication engages in intelligence collection
16 and covert action. In: this case the company | is aware of the
17 CIA relationship while the publication. is not. Bona fide
18 journalists who regularly provide: the ‘CIA with intelligence,
19 some are paid regularly while others are not. In one case
20'|| the journalist is apparently not aware that the U.S.. embassy
21 | official to whom he is providing information is actually a
22 CIA officer. 7
25. Now, what the recormendation here on 64, or the bracketed
’ — , of _econmendations ~~ and L 'm sorry. I created this. situation

25 by giving- various options -- by statute the CIA should be
TA LKEeAET -

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prohibited from using American media organizations for |
. fi: - °
cover. That is the extent of it.

What is the trouble! Joe?

t

Mr. diGenova. That seems to be somewhat -- that seems
to-be a back-off from what the Agency prohibits as well. 'I mean}
do you want to make a recommendation saying that the Agency's
prohibition against using Americans who are accredited --~
| Mr. Bader. No. |

This is the additive. The recommendation here is to
take the Agency's prohibitions which go to the question of,
American and foreign journalists, accredited to american |
media organizations, and extend it to what. is not covered under
those prohibitions, which is the use of these American media

- | .
organizations for cover purposes,

Mr. Maxwell. Is it/clear that people who are in media
- b
organizations are not accredited to those organizations?
Mr. Aaron. “IE they|were, then they would be covered.
i -
If they are. accredited journalists, then they. would not.
Mr. Maxwell. So the issue is whether individuals who
don't write -- | |
Mr. Aaron. But may: edit.
Mr. Maxwell. ‘But may edit.
Ms. Culbreath. or inay type it up.
Mr. Aaron. or may type it up.
Mr. Kirbow. Well, is this the same point that we're

|

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‘talking about less than 25 people, where you are going to make

‘writers and consultants."

prohibition.

TOP SECRET 16

a statutory prohibition against use of. all people in that
category because on page| 61 it says, "of the 65 Americans
employed by the CIA in the media field, only a little over -

{
one third are journalists; another third are CIA agents. operat-

ing under media cover, and the remaining individuals are either
k . : ve ,

employed as CIA media proprietaries abroad or are propaganda

So we are really talking about making a major: prohibition

against a segment of our} | society where at the present time ther

is less than 25 people who have any “direct contact with the.
reading mind, apparently. . »
Senator Hart 6f Colordado. I think, Charlie, it's called
a principle. If it was ‘only one person, you've still got the
problem. I don't chink it is the quantity.

| Na. Davis. Bill, in your examples on 61, the first one
at the bottom, would that now ‘be covered under your prohibition

: z

CIA officer engages in intelligence collection under cover as a

roving” ‘international news correspondent?
Mr. Bader. I can ‘t) remember from the text here. . whether
the man is accredited or! not.

If he is accredited, it would be covered.

4

Ms. Davis. If not, he is not additionally covered by your

Senator Huddleston. This does not extend to the example
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on investigation.

‘is, let's say, is working for Stompe,: or Le. Monde, and who is

‘not accredited, and at the same time is not accredited to

.an American media organization.

Tor SECRET

17

that you gave, Charlie.

Mr. Kirbow. No, ar} it doesn't here.

‘Mr. Bader. Only if he is affiliated with that group. |

“Mr. Kirbow. His affiliation covers anybody who is an
American citizen is forever and hereafter would be prohibited, i

it goes into the statute; from dealing.

Mx. d@iGenova. That!s only one of the possibilities.

Mr. Kirbow. That's one of those recommendations based

Mr. Bader. I wasn't recommending that. I was saying that

was one of the possibilities of the whole list. . . ¢
* ; 5

Senator Huddleston. | But the recommendation at the top

: | oe . .
of 64 doesn't cover an American citizen who is using the

i
i

foreign media as cover.

Mr. Bader. This. would not cover an American citizen who .

-It does not cover an American citizen who is a stringer to

a
a Latin American newspaper unless: he is accredited to: an: American
media organization.
,

Mr. Kirbow. Let mel try one more time, then, to state the.

position of not Senator Tower in this case, but another Senator

as I indicated, spoke to me on this very subject,and indicate

to you that we not do to harm or to prevent the use by the

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something that we should prohibit by law, but doing this

‘people overseas or for cover in any way -- there is not

TOOP SECRET

‘18

agency of certain people unless in some way that use affects

the rights and/or in some vague way affects the mental processes
to: “the: ‘detriment of the American citizenry, that + we don' t
concern ourselves with passing laws to protect the person who
reads something that these people do. itf you do. this, you open
that can of worms which gets you into a prohibition against any
work in the press or elsewhere in a propaganda fashion. |

‘Now, the Committee may decide that propaganda is in fact

piecemeal like this, it does just exactly that. I see nothing
in our record that indicates that the use of certain of urbse
¥

any evidence that*it"has:adversely affected the rights of the

citizens of the United States. | There isa potential for

abuse in practically anything secret and covert.

a Senator Huddleston. I don't believe the recommendation

at the top of page 64 violates what you have just said. |
Mr. Maxwell. I would not think that =< ;
Mr. Kirbow.. Well, it says, Mr. Chairman, that by statute,

by statute, which means by law, the CIA should be prohibited

from using American media organizations for cover. We apparently

have 65 people, a portion of which are being used for cover,

and apparently they consider them to be an essential asset, or

they wouldn't be. using them.

‘Is that correct, Mr. Bader?
Te FP CR er

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Mr. Bader. The CIA?

Mr. Kirbow. Yes.

“Mr. Bader. I would assume that they would have extended
their prohibition to this, or on the other hand one could argue
I don't know, what their motives were. It could have been they
felt that this, the first step they took was the one that was -
dealing with what the public was demanding.

Mr. Kirbow. Well, I really don! t see anything in our
record or any evidence that they } have given us or anything
other than a staff position on ‘this which we are trying te
sell the comnittes that this is a harmful procedure. V
| “Senator Huddleston. What this does is extends beyond
the practice of journalists to any ‘other Person, be it an
executive or clerk or typist or whatever, on the assumption
that you can't be . a Little bit. pregnant. — If the agency is
going to be subverted anywhere, not the agency, if the insti-
tution of the press is, that it is going to be’ subverted.

Mr. Bader. Mr. Chairman, the Agency has accepted the |
basic principle, because it has removed from its list of
operational assets a rather larger number than this would
call for. | |

Mr. Kirbow, ” But if I hear correctly what you: are saying

‘then, we are out to- protect the American media from being made

pregnant by the CIA and not worrying at all about the reading

public or the other, but just the media.

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of expedition, I move the passage of these three recommendations}.

-tion of CIA funded, supported, subsidized and so forth, that

13

secondly, while there is no printing going on here, the

Agency now has upon itself, be made law.

‘and the third point is that it be extended to say by statute |

Pop SECRET | | ”

Senator Huddleston. The. assumption is if the media of
the press is subverted, that it will affect the citizens, or
they will suffer. ;

Senator Hart of Colorado. Mre Chairman, in the interest

Senator Huddleston. All right. let! Ss see what. the three

are. ; |
7 |

Mr. Aaron. Well, let me summarize the first one. I think

we have agreed the first is that the prohibition on-distribu-

|
Mr. Inderfurth. Printed.

3

that be prohibited within the United States. > P 3

“Mr. Kirbow. Excuse me. Not printed.
Mr. Aaron. The word. "printed" dropped out for the followin
reason. One, it makes it easier to prohibit--the distribution

if you don" to identify where the printing is taking” place, and >

question really goes to distribution. I think that was the
concurrence of the Committee.

. | ; oO TO,
The second point is that the prohibitions of -~ that the

Mr, diGenova.. ‘Ori the use of media personnel and
institutions?

Mr. Aaron. on the use of media personnel and institutions,

rem Panes

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the CIA shoula be prohibited from using American media organiza

tions for cover.

Senator Huddleston. Well, the style of this: ought to

be changed, it seems to. me, because one of the recommendations,

instead of listed under recommendations, is the last Paragraph

on 63, is that correct?

Mr. Aaron. Yes, that would be picked up as a recommenda-
tion, that is correct.

Mr. diGenova. Plus the other one,. which is not on 64.

Mr. Aaron. well, the one on 64, the ‘bottom one: cones « out.

Senator Huddleston. Right. - 7 ¥

Senator Mathias. Before you leave. that, as a matter of

record, I am requested to note an exception on behalf of

minority.

Mr, Aaron. The second section was the covert use of
American clergy and laity. This is on Page 64. |

“Senator Huddleston. Was that included in your motion? —

Senator Hart of Colorado. No.

Mr. Aaron. tr think that covers ¢he recommendation.

Mr, Maxwell. they hadn' t discussed whether. ate, aa

should be made public.

Senator Huddleston. Well, if it becomes a statute, it
becomes public . |
Mr. Inderfurth. But the statute will remain secret.
Mr. Aaron. No, we are ready to move on it, . ito covert
tet ol ee

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TOP SECREY =»

1 ||use of American clergy and laity.

2 Senator Huddleston. Well,.the covert action vis-
3 || twith.:i:the: noted:4 exception, those recommendations go before
4 the Committee. :
5 Senator Hart of Colorado. Just for clarification, Mac, is:
6 || that the entire minority or what?
7 7 Senator Mathias. No, it's only one member.
8 Il. Senator Huddleston. Now we are ready to deal with the
g ||clergy. |
10 ; Mr. Aaron. the point here is, I think, the CIA takes.
ll the position that it has no covert arrangements with Amerigan:.. |
12]; clergy and.laity, and that this will continue as policy, but

va! _ they have relationship of a clandestine character which don't

14 involve remuneration. | |
“4s : Senator Huddleston. Incidentably, is that a new policy?

16 Mr. Bader. Yes, as of February 10, 1976. |
17 Mr. Aaron. It's pretty short. This is the sum total of
1g our findings, and it explains it better than I can.
19 Mr. Bader. This has not been, obviously you can see,
30 Senator and members of the Committee, from the text that the »
21 ||Committee has found the CIA has’a total of 14 ‘covert arrangement
22 involving direct operational use of 21,. that should be religious|
23 persons, and I found it very difficult in this to properly or

\ _— 84 respectively address the category here, whether they are America

o5 ||clergy, regligious persons, or what. It is a term of art I

eee ee

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TOP SECRET

really haven't quite been able to deal with.

As of February loth, the CIA announced that the CIA has
not secret paid or contractual relationships with an.American
clergyman or missionary.” this practice will be continued as a
matter of policy.

Senator Huddleston. I think we ought to clarify that
religious persons. That would include Chuck Colson.

Mr. Bader. The issue here is, we are saying in the first :
instance, we welcome this policy which they intend to put into
their operational prohibitions, and the recommendation that

we bring"to you is a very simple one, in. addition: to that dis

‘
that it be extended. from contractual to all operational rélatio ~

ships, paid and unpaid. —
Senator Huddleston. By statute.
Mr. Bader. By statute. _
Mr. Inderfurth. May I ask a question here?
How does: this conform to Senator Hatfield's bill .on-this?
Mr. Bader. I don't know. :
Mr.Inderfurth. I don't know. I'll get a copy of it,
but I think to the degree possible, if the committee
recommends by statute a prohibition, it should ba made to confo ™m
to: that’ because he has put ina great deal of work on that, or
without knowing the facts, I might add.

Mr. Kirbow. The other. ‘thing is the. Committee may want.

to support legislation that is already pending.
TAN Ee

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TOP SECRET 2 **

‘Mr, Maxwell. What is the nature of the covert relationship
‘with religious persons now in effect?

Senator Mathias. A few patriotic volunteers.

Mr. Bader. Patriotic volunteers, at least one of them,
from the operational records.

I think, too, they have what is called a memorandum of
agreement which is not contractual in the sense that it.
involves paid or unpaid.)

Mr. Maxwell. ‘What are they doing?

Mr. Bader. They collect intelligence information. .

Mr. Kirbow. What is a religious person, Mr. Bader, a. they
use it or as you use it here? |

- Would that mean the organ player that is a civilian who
travels with a preacher and plays the organ? —
Mr. Bader, “No. It is intended to be the American clergy,
“although I certainly: would lean on whoever can tell me what a>
proper term is to define American clergy.

Senator Mathias. What about this. fellow around, Maharaja
Rani?

- Senator’ Huddleston. I'll think on your defintion.

ur. Bader. I think we'll have-to have a footnote as to
what American clergy may be.

Mr. diGenova. American clergy or missionaries, certainly.

Senator Huddleston. Well, missionary gets a little

fuzzy.

Se Le, dol le ce

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TOP SECRET |

a a Mr. Bader. The Agency uses “American clergy or missionary. |

2 Senator Huddleston. It has to: be a person whose primary |
3 occupation is for a religious order or: sect | or something, “it

(4 | seems to me. |
5 _ “Mr. Kirbow. ‘How about the Mormon youth who do their things
6 overseas? |
7 I Would: this take care of them and prevent | them from getting
8 gobbled up?

9 Senator Huddleston. I think that's a good: question. “They
10 | receive no pay. | | _

11 ‘Mr. Kirbow. _ They are. not church people, per se. It ps

12.|| Part of their religion, doing the service. You see, : this ? jets

Y 13, tobe a rather broad extension, or you leave out certain

14 || things if you are not careful with your definition.

15 Senator Huddleston. I think there may be somewhere in our

16 | litany a definition. I am not sure. |

19 "Mr. Inderfurth. I would imagine that Senator Hatfield's
1g | bill, a definition of what clergy -- that would be spelled out.
19 || There are copies ‘coming over now. ; .

20 Mr. Bader. — Well, I think maybe we: will get a copy of the.
91 || definition of clergy or missionary. Maybe that will clear

22. that up. . |

ps | “Senator Huddleston. Well, I think, you know, some

™ | 24 || churches send people over for a very short period of time. They

25 || are lay people, really, but while they are there, they are
, TAR Creme

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there more or less under the auspices of the church group.

Mr. Kirbow. At least a local church frequently sponsored

{| them.

Senator Huddleston. r don't think you can prohibit all
those kinds of people. I think gome kind of definition should
include the primary occupation of clergy, clergy itself.

Senator Mathias. Well, why don't!we commit to staff for
the moment. the question of definition?

Senator Huddleston. I think we will have to do that.

Okay. Are we ready to move on that?

Mr. Aaron. The ‘recommendation is that whomever or hdwever.|
we define them -- and that's obviously an important question,
that they either be prohibited by statute. The other alternati
is to simply prohibit: any further or. recommend the prohibition |
of any further CIA recruitment in this field.

“Ms. Culbreath., ‘The way this is.worded, this would get -
anybody who is a lay member of a church. You have got recruit-
ments of American clergy or laity. . .

If I am a member of the Methodist church, I am in the

| laity of the church.

‘Mr. Miller. You’ have raised a question. There are people
who. are not. priests in the ‘religious: hierarchy ain a~ particular
sect who may devote their entire: lives to that particular
church.

Senator Mathias. Well, I think the word "a religious” --
TE Th ee es PE

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TOP SECRET | at

~ 1 ‘I'm serious here -- should be considered.
e ; Mr. Aaron. "A réligious?"
3

. Mr. Bader. We'll have to obviously work on that. Laity
4 j/was not meant here to be a member of a church, for technical
5 terms, the'technical terms Mr. Miller mentioned.

6 Mr. Miller. As distinct from the congregation, it was

7 |)meant to deal with the administrators in a religious order.

8 Senator Huddleston. Well, some sects have lay preachers and|

9 | lay clergy.
LO Mr. Kirbow. Senator Hart, do you want each of these

‘11 | categories like this examined in the light “of the constit&itional

sight

12 question that you raised earlier?

o™ . 13 Senator Hart of. Colorado. r just raised the issue where
14 the academics were concerned “to resolve it, so I'm sure it |
’ 15 |) should be raised by somebody. |
16 | “Senator Huddleston. Are you ready to go on the religious
17 | insofar as what is the definition? Then that will be ~~
‘18 , Senator Hart of Colorado. ves, sir.
49 Senator Huddleston. Then that will be moved. up; I assume,
20 with exceptions noted? -
21 - Mr. “Kirbow. I don't have any exception to that one; sir.
22 Mr. Inderfurth. That is by statute, right?
) Senator Huddleston. Pardon? | |
¢ ; _ 24 or. Inderfurth. Is that by statute?
25 Senator Huddleston. Right. .

ST a ol ol oh

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example, the prime example of regulation doesn't deal so

or things of that nature...

in the health area, where there is some practice of the

set in the community at. large, and that generally has dealt

TOP SECRET

Mr. Maxwell. There may be a First Amendment argument —
here, particularly in fundamentalist groups whose religious. -
beliefs: are committed, are directed toward opposition ‘toward

Godless atheism.

Mr. diGenova. Except that the control of religious organi-
zation has historically been subject to governmental regulation
in this sense: the Supreme Court in light of Senator Hart's

question last night, I did a little bit of research.. The

much with prohibition of the Government dealing with someone,
although there are Vast areas where the government is not 4.
permitted to get into. “The question is, for years the Supreme
Court has ruled that’ there are certain health regulations é
states that. religious sects must comply with, and they have

to comply with it even if it conflicts with their basic religio 3

belief, that they ‘have to comply + with ity like quarantines

'- So there is clearly an area where the First Amendment of.
religious freedom concept falls in the face of a greater good,
the need of the general public, and that has generally ‘been

religion which conflicts with some standard which has been

wit:h health.

Mr. Kixbow. Maybe the HEW Act can bring the CIA under one

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130 a government agency, which happens to be the cra, or any other

a member of one of these sects that was in an area where they

TOP SECRET 8 »

of these health threats.

‘Mr. diGenova. Self+immolation.

Senator Huddleston. The snake acts and innoculations.

“Mr. aiGenova. That's exactly right.

ur. Maxwell. The problem is that's not quite applicable
to this, and one has to argue in the past the Court has ruled
on things that are found to be a threat to the personal liveli-
hood or health of the individual rather than something that |
could be construed in a fundamentalist sense.

Senator Huddleston, This doesn't preclude 4 a sect that

may be anti~atheist. and as ‘such anti-Conmunist from , pursuifig

its principles, but the restriction would be pursing them throu

methods.

Ms..Culbreath. Would this prohibit, then, somebody who wa

gained information that would be helpful from them being source ?
Senator Huddleston. ‘I wouldn't think sO ‘if they wanted
to write letters to the CIA. . .
Ms. Culbreath. Well, just in terms of the. debriefing ‘kind :
of ee ; .
| Ms. Davis. We are talking about operational, not coming
in to the Domestic Contact Service.
’ Mr. diGenova. It is not very clear on this.

Mr. Maxwell. The problem in part goes back to the difficult:
. ST ed ol ol ce

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TOP SECRET 0
~ 1 ||we had with the Nomestic Contact. Division in trying to determine}
-_ 2 | what was operational support, if operational. support would be.

3 what did you learn’ about individuals there who might be
4 receptive to American approaches. ‘Then the clergy would be
5 || prohibited from providing that kind of information if that
6 || is operational support. .
7 IL - Senator Mathias. Well, it seems to me if the religious .
8 || came in and said I. was at a meeting. of the Holy Rollers last nig é
9 and we all went down on the mourner's bench, and I. heard the
Lo || most remarkable things, and this is what I heard, there would
11 be no prohibition against listening. Now, .if you say, go Back
1p.|) to the Holy Rollers tonight -- 4
a 3 | Mr. Kixbow. And listen again.
lai. Senator Mathias. Then you've got a question.
15 |e Senator Huddleston. Then it is operational.
16 Z.don't think there's a need to write in that it doesn't
T pertain to the voluntary furnishing of information. I don't
18 know. . | | |
is | My. Aaron. I don" t think -- no, ‘that! Ss really not an
20 operational use, quite ‘frankly. rt! s “very similar to the DCD
21 which takes information from lots of people, including people
50 who are and have been. for some time proscribed by CIA's own --
- 93 |) _ Sénator Huddleston. Well, anyway, that would be worked
™~ ; p4 || out in the statute itself. _ |
| 285 - Mr. Aaron. We are spared the problem.

TAR Cremer

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"Top SECRET

31
~ 1 Senator Huddleston. We ought to move on.
2 ; Mr. Aaron. The next section is proprietaries and cover.
3 | Senator Huddleston. — I just wonder if in Presenting’ this,
4 these three, these four, now, that we have just approved, it
5 | would be of any value: to assert in our report that we recognize
6 that. the Agency has to “fina proper cover for. its agents, that
9 restricting that cover isa matter of ‘some importance, but there
.@ ||are certain institutions ‘that ‘the Committee feels” because of
g | their nature and ‘because of their standing ‘in the country, and
lo because of the need for the public to have confidence in.
11 | that they should be, in effect, off limits, and because’ of{enat
12 | we recommend that these four recommendations. be brought. I
) 13. don't know whether you want, to make it sound any better x
14 || not. |
15 ‘Senator Hart of Colorado. Mr. Chairman, does the absence

1g | Of brackets on the next set of recommendations mean that they

17 |jare non-controversial?

18 Senator Huddleston, on the proprietaries?

“49 oe Senator Hart of Colorado. Yes. |

20 | Mr. Aaron. That is correct.

21 ; Senator Huddleston. The gentleman did such a great job

‘p99 |) that nobody can question them.
23 Mr. Aaron. I think there is only one set of brackets, and
oq || the next section is on page 67 in which it says that --

25 7 Mr, diGenova. Oh, yes, there is something.
. Tee CF eI ee

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dissolves a proprietary, it tries to avoid conflicts of ‘interes

ise SECRET ®

Mr. Kirbow. What page are you on?
Mr. diGenova. 67.
At the bottom of page 67 is a bracketed quote about

Admiral Raborn, a former Director of Central Intelligence,

Now, if my memory serves me correctly -< now, first of all,}
this is the first time that anyone is mentioned by ‘name in the |
findings. | | | |

Senator Huddleston. And the total findings are in that
section. | | : |

Mr. Kirbow. The findings are this foreign and military.

Senator Huddleston. We referred to Helms and Laird, but
I think we decided we could write around that. ©

Mr. diGenova. Well, here’ Ss “what happened here. This

paragraph deals with. the. fact ‘that when the Agency disposes or

However, when noted that sometimes pressures were brought
to bear on the Agency to dispose of the entity as a favor to.
someone, so that it would benefit someone else. |

Now, the most glaring example of this was this activity
of ‘the former Director, Admiral Raborn, who actually became
involved in negotiations on behalf of a client, Overseas
National. Airways,’ which he represented, and he wanted the sale
of Southern. Air Transport, which was. a CIA proprietary, large
assets and large property, to Overseas National Airways, which

of course would have acquired Southern Air ‘rransport’s lucrative
wee ae em fee ea

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routes.
Now, the way I originally had it written was "A former

Director of the Central Intelligence Agency sought unsuccésss~

fully to influence the sale.” However, if it was left that way,

people would have to guess at which one of these guys did this
and it would unfairly impugn all of the directors. The name
was inserted. Therefore, the question now becomes whether | it.

should be left in at all since the name is inserted, ‘and since

‘the name is mentioned in the report, and whether or not the

whole sentence-~
| Senator Hart of Colorado. Well, what if we just saig "A
former Director"? | : a o
“Mr. diGenova. well, the problem there, Senator, is then’
people say, which one was it?. |
Senator Hart of: colorado: Good.
Mr. aiGenova. Oh, all right.
Mr. Inderfurth. I think the assumption would be Richard
Helms. - | | |
Mr. diGenova. MeCone more than Helms.
Senator Hart of Colorado. Well, we ran into this last:
summer with the Exener matter and all like that.
Ms, Culbreath. ‘A former person. |
Mr. diGenova. The Agency itself cited this as the most
flagrant example of intercession on behalf of anyone. As a :

matter of fact, the memorandums on ‘this refer to dozens of -
Te ee ee .

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1OP SECRET

34
1 | phone calls and overtures, and it is a former Director trying to
” . 2 gain a benefit. Tt is an unseemly situation, and they labeled
3 it as a conflict:of interest which: they sought to avoid, and
4 in fact they. dia, and they are praised for it in the report
5 because they were really under - tremendous pressure.
6 ; So I have no feeling one way or the other. I think to
9 ‘|/ leave out his name unfairly impugns, the other. To leave it in,
g |jialso, is only the second time in the whole findings and conclusi t
9 that we mention anybody" S name, so I don' t care,
10 | Senator Huddleston. And you' ve got one, Recommendation |
- 431 || No. 5, related to the disposal of the proprietaries, that the |
12 Justice Department approve? . S
~s “a3 Mr. diGenova. Be consulted on| the disposition. |
14 - Mr. Kirbow. Mr. Chairman, can;I be heard on that?
15 _ Senator Huddleston. Yes, sir. |
16— Mr. Kirbow. Senator Hart, in this regard we have consistent ¥y
1? attempted by most. every ‘reasonable means to not use the names
1g ||of people unless they had committed] something illegal.
19 || —« Senator Hart of Colorado. Well, don't side with me. I'm
50 not taking a position. . |
21 . Mr. Kirbow. But the Exener. thing was a big example, but:
22 ||we must have had 20 other names that we went through on that
23 ||assassination, and we wrote around them,
os , 24 Senator Hart of Colorado. | But a number of people argued
25 ||stxrongly that we ought to name her and go into details, so I:
TOP CFCRET
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suppose the Same arguments could be used here on this matter. |

had violated, and none is apparently cited in the record.

‘Admiral Raborn. I think there's another example. I'm. not

Should do is | consider this action’ without necessarily naming

TOP SECRET

350

Mr. Kirbow. But the point I raised at the staff meeting

i

just before the Committee came back, when. the subject was

raised, was did Admiral Raborn, as a retired military officer, —
currently in a civilian status, although he was former —— reak
any American law, or had they sold it to this, would it have
been a violation of the law, and the answer was no..

If he was involved --+ or they knew of no law that he |

Pressure was brought: to bear, there! is no doubt about it, ‘by
sure whether Joe described it to me or someone else, of a *
very senior official out there dealing back with the | Agency.

Now, the military, as Senator Hart knows, is prohibited |
from this by regulations and I think by law. I know that as a
regular military officer, you are not allowed to do contractual
business with your agency forever, but with the other military
departments and the Department of Defense, I think you have to
have a: cleansing period of ‘five to seven years, ©

I don't believe there is any such provision in the Act

that applies to. former Directors, and probably what the Committ le

him unless he was in violation of some really serious
wrongdoing, and: make a prohibition, drawn similarly, with what

now applies to senior officials going back and kind of exerting

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undue influence on those people.
Senator Huddleston. Joe, is it accurate to say that |
pressures were often brought to bear?

Mr. diGenova. We changed that. to say. sometimes. ‘This is

}a rewrite. Someone else wrote this after I had submitted it,

‘and we had a meeting today, and we changed several things in

there.

So I leave it up to the Committee. This was a matter that
I-- I wanted to flag it and leave it there. The explanation
is as clear as I can give it. . - | |

Mr. Inderfurth. This is the first time he is mentioned -

oe

Ae

in the entire paper.
Mr. diGenova. That's right.
Senator Huddleston. Why don't we delete that sentence. and
keep it in our full report, our big report.
Mr. Kirbow. There is a major classified report on
this that would contain all the facts. :
Senator fuddleston. r am goncerned now whether any other

instances of someone may be, of similar standing as Admiral

“Raborn.—

Mr. diGenova. Yes. There are instances in the record
which do not deal with proprietaries, of John McCone intercedin
on behalf of Pan American directly with the Director of
Central Intelligence, and it is not mentioned in the report,
and it should be, and it is a problem that we: have had, Mr.

TAP &F eR Er

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Chairman, has been that the work involving the relationship of
the Central Intelligence Agency with American business companies
was "severed off from the proprietary work ‘for the’ simple »
reason that they are not the same thing. |

That work has been done. It has not been pursued vigorous-

ly, ‘not because the individual: who was, responsible ‘for itd .

Senator Huddleston. That happened after he left.

_ Mr. diGenova. _ That's right, after Mr. McCone left the.
DCI, he had frequent contacts, according to the records, with
the Agency, with high level: Agency personnel, and in one shitandh
he interceded personally with the Director of Central Intelli-
gence to avoid actions which would be taken by another govern=
ment and its-airline:which would adversely affect Pan American
world Airways. |

Senator Huddleston. It is hard. to separate a man from his
past totally,
Mr. diGenova. It seems particularly hard with DCIs.—

Mr. Kirbow. Well, not: only here, this is not with the
Agency, but it came up in my experience with the Armed Services
Committee involving Continental Airlines.

Senator Mathias. This sentence.

Senator Huddleston. Just the sentence in brackets.

“Senator Mathias. Well, I think if. you! ve. got a Raborn Case

a. MeCone Case .and whatnot, that you can't make fish of one and
TAF crear ne a

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fowl of the other.

Senator Huddleston. IT think. we've already said that

pressures sometimes were brought to bear and we- make recommenda-
tions to correct that.

Ms. Culbreath. Mr. Chairman, could I suggest. that maybe if
we do delete that, that we perhaps redo that previous sentence
to make it a little stronger, and perhaps in some way
indicate that these were serious pressures, and they were, I
think, hard pressures to withstand when somebody in that kind
of position -~ | |

Senator Huddleston. They were withstood, though.

rng
yet PEEP Ray |

‘Mr. Maxwell. They would get lost the. way the sentence is
cut. | |

Mr. diGenova. I | think what we will do is David and I
will get together, and Blizabeth, and we will change this
"however" sentence, ehe sentence. that precedes ‘the one that,
has just been deleted, and we will expand that sentence to.
more accurately explain that the. pressures came. from high soureas
sometimes. Some of them may have been maybe, former Agency
‘directors. . |

Senator Huddleston. I think we should make the point that
at was former. | | |

Senator Mathias. ‘Well, if they were former directors,
‘then you may as well leave in the last sentence.

Mr. diGenova. Maybe. -
TD

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Mr. Kirbow. - Mr. Chairman, may I suggest that mayhe
perhaps we use this type of part of the investigation and what
we know from certain of the other files to prohibit this type
of conduct by. law in the future in our general recommendations?

Senator Huddleston. And make it similar to --.

Mr. Kirbow. | similar. I think you would have to look at
something from the staff.

Mr. diGenova. I didn’ t have that recommendation in there,
but I think the record indicates it ought to be there.

Mr. Kirbow. It wouldn't be proper, necessarily, to put it

i]

right here under proprietaries, but. let's put it in the

alee

aye

general recommendations.

Mr. diGenova. David, did you get that? --

Mr. Aaron. I'm sorry. | .

There's a recommendation that --

Mr. diGenova. That Agency personnal ate -

Mr. Kirbow. Senior officials.

Senator Huddleston.. .Similar to what applies now for
nititary, | | _

Mr. Maxwell. Well, perhaps the statute, perhaps: we could
recommend a statute similar to that governing the: Department of
Defense. -

Mr. Kirbow. Be enacted by the next Committee, similar
in effect to. . | |

Senator Huddleston. And find a proper place to put it in
Te ol at lacie

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}}our recommendations.

Mr. Aaron. Okay.
Mr. Maxwell. Well, Charlie, correct me. I think the
proprietary section would be the appropriate section because

that would be where it came up most;,unless there is another

one that you see more readily.

“Mr. diGenova. We can work that out. I don’t - think
that's terribly --

Mr. Kirbow. I think there have been two or three sug-

gestions made here that will result in general recommendations

on a page that isn't necessarily supported by findings, but you |"
come to this overally conclusion based: upon your total concept
of the Agency and its procedures and everything else in view
of the findings. | | . |

. Mr. diGenova. The only thing T want, to do is -- David,

I know you have gone through this, but the Senators may want to-

‘look at page 68 through 70, which deal with cover, and particu-

larly with Mr. Welch.

“Ms. Culbreath, - I had a point I wanted to raise on that.
. Mr. diGenova. Well, Mr. Chairman, I think: the Senators
want to read this. ; .
Ms. Culbreath, Why don't we let them look through it.
(Pause.) |
Senator Huddleston. Let's go back on. the: record.

Mr. diGenova. I do know the Agency is going to come in

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tomorrow to review the cover paper from which this summary is

drawn. I know Eric has some problems with the cover paper, bot

editorially, because they view it as overly simplistic and

harsh because it-. reflects all of the Inspector General's

| judgments, but they have some problems with cover in general,

but. I don't think this is going to be part of that problem.
Senator Huddleston. I have some problem with this page
70. relating to Welch because it seems the whole implication of

that is that he was. murdered because his cover was blown, and

é

highlights the argument, I think, correctly, but it. seems ‘go me |)

it leaves’ the impression that here is a case where a fellow's .

cover o£ lack of cover resulted in his death.
I think the Agency people have specifically said to us_

so far that they have no reason at this point yet to expect

that that was the reason he'got killed. |

Mr. Maxwell. In regard to the specific quote, I think
we have to be very careful as to getting involved in an argumen
which would imply that anything that we possibly did had an 7
effect on it, and also, that it seems to point to Mr. Welch |
and say, well, it is all his fault. | | |
| Senator Huddleston. He didn't protect. his cover, he

didn't do what they advised him to do, and you see down here

ve have another quote which says, referring to international

terrorism and incitement for these kind of people to take the

wee pee ete

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kind of action which unfortunately led: ‘to the death of Dick

Welch. There again we are ascribing something | to the death of

‘Dick Welch which nobody knows yet,- you know, what ‘terrorists

killed him or why; at least our record doesn't show...
Mr. diGenova. These statements here, Senator, this isa
direct quote from Eric Eisenstead's memo. Do you think that:

we should maybe-in the findings and recommendations shorten

‘this and maybe --

Mr. - Kirbow. I think the part of the record which is an.
unknown fact is why ‘Bick Welch was killed, and - we should stay
away from any quotes or other pronouncenents in oa ol
attribute his death to any particular thing unless we know
something. | | |

Mr. Aaron, I think that is a good point. We might put
in here a statement which says the Committee has no information

as to ‘the reasons, purposes or cause, specific cause, of his

y

.death. The point is to get at the question of cover, to

-step out to the question of cover in the report, as we do, I

think, appropriately, but not have talked about the one case

‘where this all came out in public, rightly or ‘wrongly.

Mr. Kirbow. Why don't we use the cover for the gentleman’

t

in London, then, where as the tour buses go by, of course, you

know this is the, hone of the CIA chief, and he hasn't been

killed yet or "anything like that. If we want to use that

kind instead of using this. death example; which, by the way,

TAR RECRET

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-has brought some thousands of letters from the constituency, of

certain southern Senators who shall remain unnamed or near-
Southern Senators, becaise it kind of was a catalytic agent
in getting a lot of complaints on the Committee and everything
else, and this pointing out or explaining Welch's death goes
back to it. | |
| Senator Huddleston. I'm sort of southern.

_ Mr. Kirbow. And you've gota lot of them.

“Senator Huddleston. Of course, it was used for that

purpose by certain high officials for that.

Mr. Kirbow. The very highest, including attending the

“s
te.

funeral.

Mr. diGenova.. Well, I think one of the things we wanted

_to pinpoint here, and.first of all, I think we can summarize th

‘Agency's testimony a little better, The Agency said, nothing |

this Committee did, first of all, had anything to do with his
death, as far as they know..
Ms. Culbreath. But they don't know.

Mr. diGenova. ‘As far as they know, they don't know : one
way or another, but the impression ‘that was created in the
press was, and was pandered £o by the .bcr and the President,
was that the general actions of exposure of Agency operations
were responsible for the death of Mr. Welch, and they pandered
that by y inviting Committee menbers to the funeral as if they

bore some responsibility:
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' Now, the obvious public relations value of Mr. Welch's ‘s

death, the first time in: history ‘the ppo and the DCI go to.
a funeral in public, they never did that, and there is no doubt
that they tried to. make political hay out of his death. I
think it is only fair that the Committee ultimately ‘say -7

Senator Huddleston, » Right, but I think you' ve got two

different problems. You've gota problem with whether the

Committee wants to present its case and exonerate itself on the
basis of everything that. is known about the death. of Welch,
and whether that is s pertinent to the problem of cover.

Now, we make a recommendation that the CIA shall make an
effort to place a greater proportion of its officer abroad "
under nonofficial cover. | It seems like what we need, there! s
a statement here is that official cover has not. proved to be —
effective, and if we mention Welsh at all, I think the point we
mention there is that his name was carried, that while he was
there supposedly ‘under cover, his name was in fact carried in a
newspaper, ‘the name of his newspaper had. been carried in.a
foreign newspaper, and he was living ina house that | was known .
to be the house. |

Mr. Kirbow. His true identity was widely kriown.

Senator Huddleston. We can cite him as an example without -
indicating why he had been killed, of here is a case that
everybody knows about, so-called official cover was not. in

fact very deep cover. There may be other instances that we
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~ _1 || want to refer to, but if we get into his death at all, I think

a we have got to present the case, that blowing ‘his cover is not
3 || necessarity what ‘killed him. “Nobody knows that as of now, so-
4 far as I know. Nobody knows it wasn't just-a street gang or an
5 idiot. : |
6 Mr. Kirbow. It could have been like the Senator, John
7 “Stennis case, where they buttonholed him in " €ront of his
8 house and killed him for robbery purposes, | |
9 ‘Senator Huddleston. We've asked them two or three times

“10 | here, have we not? | | |
Ll i Mr. diGenova. Yes, we have. In fact they. don' t know
12. ' Senator Huddleston. In fact, the last time “Nelson was

\ | 7 13 here we asked him.

14 Mr. Aaron. Can I try a fix on this, turning to page 70,

15 || instead of saying "the career and tragic death of the station

16: chief," let's just say the "situation of the station chief in

17 || Athens illustrates the tension. — As the Chief of the Cover |
‘180 Staff stated, by the vite person becomes a chief of
| 19. station, there is not a great deal of. cover left ;' ‘leaving in
20. the rest of that sentence, and then add in here, as you did,

21 | “Mr. Welch and his predecessor were both: identified and named.
22 in the local press. rurther, Mr. Welch occupied the same

23 house." |
24 Senator Huddleston, Which presumably was known to be.
25 the house of the station chief.

oe TAR CRAM er

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Mt. diGenova. In fact,’ the station chief! s name and
‘|| address in Athens had been presented, so when he wasiin there
the address had already » been printed previously.

Mr. Aaron. Which. was also known.

Senator Huddleston. Now, if we want to say something about]
an added dimension to the seriousness on blowing cover or
cover being diminished, is the situation in the world with
terrorism or the vulnerability it makes of people --

Mr. Kirbow. To the unstable. - . |

Mr. Aarons Well; the point in the testimony,is that
this was an added danger, but. because they've got a | job’ to
do, they’ re not going to really do too much about it. It's:
‘la real risk they are just going to have to. bear. |

Senator Huddleston. That! s an occupational hazard, but we
are talking~about how to: protect their cover, and our recommen-
dation is that they use -- have an official cover.

Mr. Kirbow. Well, can the staff change the language,

because we know exactly what you want to do, and-without:
taking ‘further time, why, don’t we just change: it.
“Mr. Maxwell. I would just hope that the two quotes after
the one that David cited) ‘the quote, he, Welch, was asked, the
‘last quote, we could make the point in a different way because
the impact of the first quotey ,I think, is this guy was stupid
ané irresponsible, and I don't think we need::to have any

implication Like that in. the report, and the second one, I
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terrorism."

12. talking to Joe about defining. the small business, and. I think ,

13

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TP SECRET

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think we can make the point that terrorism may constitute a

greater threat now.
Senator Huddleston. I think that quote ought to go entirel
because it does leave the implication. that there was a direct
link to losing his cover. and his assassination.
_ Now, we don't know that.
Mr. Aaron. So just take out the last one.

Mr. diGenova. But still ‘speak. about the added danger of

international terrorism. Just stop at the word "international
Senator Huddleston. Down in the recommendations I' vesbeen . e

we fairly well understand what’ the concern is, or do we, Joe?

Mr. diGenova. Senator, I was going “to suggest, if you

large proprietary is, the Senator was concerned about what -
was meant by "should be kept small,” and f tried to indicate
really we are talking about Air America where you had 8000
employees of the CIA, both in Langley and abroad, and then
another 8000 employees Of the Air America complex. That is”
big.

| “But .Z: think: what: we should say is; organizationally small,
and organizationally and numerically small, _ because what we are
really talking about is! when they get big, whether it is in |

numbers or finances, and larger in terms of people usually mean

TAP 2eener

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larger in terms of finances, also, Then you have both of the
problems we addressed in the paper, which was the risk of
unfair competition with private enterprise, and. the risk of
blowing cover, of compromising security. |

So I think that --

Senator Huddleston. I was wondering if it could be

designed in such a way as care should be taken’ that. it not be

| any larger than necessary to achieve the objective for which —

it was established.
“Mr. Kirbow. Excuse me, Senator. It would not get the
Air America thing because at the time they needed one twice
that size. | $
Senator Huddleston. They needed it that big, that's
right. | | |
. Mr. diGenova. | The reason this language is in here is that
the Agency officials themselves who testified, all of them, ©
ineluding the DDO, said they would like to have small ones, in
other words, a small number- of employees, small operation.
Senator Huddleston. What about their insurance business?
. Mr. diGenova. “That's kind of an exception, although
actually that is an example of a lot of money with only a few
employees. There are only a couple of people that run that

whole thing, Isenstead and a couple of -- one investor,

| Istenstead, and an auditor. ‘ There are three men that run that

‘$32 million complex. So that is-a different animal, really..
TAT Re

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Senator Huddleston. So if you are going to use the term
"small," you 've got to say it from the standpoint ‘of employees
or resources. —

Ms. Culbreath, I was just going to suggest. that, since

‘another of our recommendations suggests annual review of. all

of these criteria, and since their budgets are going to. have to |

be included for the oversight committee with review for the

‘others, and we have got a proposal that the Committee also

establish guidelines for the approval of the creation of large...
proprietaries, should these become necessary.
Perhaps the better thing to do, since these proprietaties TE

are for a specific need at a specific time, and since we have

“" got the review procedure, is sort'of trust it~ to the oversight

committee to see to it that they don't get too big, whatever

that may be, and leave it to them, maybe just delete that _

‘second sentence.

Mr. Kirbow. Well, that's certainly a workable way.
Senator Huddleston. I don't see how you are going to keep
that sentence’in- there without: having it..

-Mr. Aaron. I would also suggest that perhaps in the

‘section on proprietaries, where we make a comment. about how

large proprietaries run risks in blowing their cover, we might
would it be possible, do you think, to make a s finding or make
an example in regard to Air America?

Mr. diGenova. Absolutely because they have. conceded
TA CEePRET

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that's the one that ran all of the problems.
Senator Huddleston. You do mention that somewhere, don ' t
. , . fr,
you?
Mr. Aaron. It's not mentioned specifically, but it might

be possible to say, you know, maybe you can put a footnote on .

the first paragraph. which simply said -~.

Mr. diGenova. You mean on the findings of page 66 that

“too often large proprietaries have created unfair" -~~

“”

Mr. Aaron. “Unwarranted risks of unfair .competition with

with ‘private:business: in ‘compromising: their: cover." *You..should

Say, "for.: example, ‘ “adr Anerica;,':for: example, ‘which: chad’:8, 000°
employees, "and sa: forth, ran into both of these orobiems.
Senator Huddleston. I think that would be all right. :
Mr. Aaron. And then you would have at least some referenc
to what “large” was.
Senator Huddleston. Then you've got the review and the.
oversight. | _— -
| Mr. inderfurth. So ‘the idea here in the recommendation was
to take out the second sentence. 7

_ Mr. ‘diGenova. Yes.

“Mr. Inderfurth. Why not take out the first as well and -

just go to Recommendation No. 2 as No. 12.

Mr. diGenova.. Well, I think -- can I just say this -- tha
by indirection, approving of an activity is, 7 Suppose, one

way of doing it. I don! t see anything wrong with stepping up
Te cram ne ”

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and saying we examined proprietaries, we found them to be --

they had problems but basically they were all right.

Mr. Inderfurth. Couldn't that be in the body as well?
Mr. Kirbow. The one thing we have failed to do on this
Committee is where we are strongly in favor of, is to speak

out in a’manner supporting an.agency under otherwise violent

attack from many| sources, and I think --

Mr. Inderfurth. I think that. is not true, Charlie. I

‘think you will find, if you read the findings of Bill Miller

and ethers wrote/in the first part, it says very strongly, ,

intelligence is necessary; we need it. oo - :

a

Mr. Kirbow.| I'm saying up until now it has been an agenc
under attack. I think this whole section on foreign and
military has been to make a balance between past wrongdoing
and current operations... |

' The Chairman. There can't be anything wrong with leaving

the sentence in there.

Mr. Maxwell. May I raise a question to the second
recommendation, as to the reason why by statute there would be

an annual review rather than recommending that to Congressional

The second part of that is, my-understanding of a number
of the proprietaries is that they are not operating; and to
require GAO audit of a whole group of in a sense notional

organizations may be preempting. the kind of review that the
TR CF AP


TOP SECRET 7
~ 1 oversight committee should be doing rather than setting it out
a 2 here. It's just] a question. | | 7 |
3 Mr. _ diGenova. This is a rewrite of my original recommen~
4 dation, and it is a. good point. It may very well be that that.
5 is superfluous, if you are considering oversight by a committee.
6 | Senator Huddleston. The Committee cannot conduct an audit,
“9 || though. | |
8 Mr. diGenova. And that was the purpose for the Committee
9 taking on board independent GAO auditors. - |
10 Mr. Maxwell). The Committee can request GAO auditors. —
ll | Mr. Kirbow. Anything. that appears to be on an audit ”
12g | calls for an audit. | | 3
- . wh _ Senator Huddleston.” Calls for a GAO audit or gives the .
14 Committee authority to call for one. | 7
15 . Mr. diGenova. TI don't think we need a statute. We can
16 talk about it as part of Congressional oversight. As part of
“19 the Congressional oversight function, the oversight committee
18 should review proprietaries annually and where necessary
19 || conduct audits with the assistance of the General accounting
20 Office. | | |
21 | Mr. Kirbow. Here, Mr. Chairman, I think again the point w
22 || made yesterday, that we should say at least annually, so that:
“93 they don't put you in a box if you want one every two months -
—~ : 24 because of circumstances, "at least annually."
25. | Senator Huddleston. You could add in Section 3, at least —
SA ee ee
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1 |) there, giving the Committee authority to establish guidelines,
2 || to establish for large proprietaries, should they become

S || necessary.

4 You could also make the statement there that the Committee.

5 |imay call for a GAO audit periodically. .

i
{

6 Mr. diGenova. So we will rewrite 2 to eliminate the. statut
7 y- _ Senator Huddleston. Independent GAO audit.
8 Mr. Aaron. No. 2 is rewritten so it is not required by .

9 Statute that there be an audit, internal audit?

10 Mr. Kirbow. No GAO audit.

11 - Senator Huddleston. The only thing I had in mind of :
12 || taking out of 2 was just the independent GAO audit being *
13 required by statute, and leave that to the discretion of
14 || the Committee, but leave the rest of the review, right?
15]. Mr. Maxwell. You amend it by statute that an annual

16 review of all proprietaries?

47 Senator Huddleston. An internal CIA audit.
‘18 | Mr. Maxwell, Or would it recommend that, I'm not sure
‘49 which. |
‘20 Mr. diGenova. I'm wondering whether it should be done

21 by statute. ‘Maybe we should, recommend to the oversight
- po oo
22 committee that there should be an annual review consisting of
23 || internal CIA audit. | |
7" 24 Mr. Maxwell. -An annual report to the oversight committee

25 |} and such GAO audits as the Committee -~
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~ * Mr. diGenova. May deem necessary.
. 2 “Senator Huddleston. That's all right.
5 Mr. dicenova. And then we could add, as part of its
4 annual report, the GAO should record all of its intercessions.
5 That should be -"report." _They record all.of them, so change
S| "record" to "report". | |
7 We. can rewrite that.
8 | Senator Huddleston. Make that a little stronger.
9 Mr. diGenova. Must report? - | |
10 ‘Senator Huddleston. Shall be required to report.
11 . Mr. Aaron. I'm sorry. | | .
12 . Could we now have-a recapitulation by whomever ‘thinks they
>) 13 followed this? _ 7 | |
— 14 - Mr. diGenova. Elliot?
15 | I defer.
16 Mr. Maxweil. "There should be an annual review"--.
lv “Mr. Baron. There is no longer a statute. The Committee

18° recommends’ that there be, right?
19 | 7 Mr. Maxwell. o- “a review, at least’ annually, of all

20 | CIA proprietaries."

21) | Mr. Aaron. By ‘whom? »

Re Ms. Culbreath: By the oversight committee.

£3 “Senator Huddleston. . By the oversight | ‘committee .-

24 | ur. Maxwell. Well, you! te: defining what the xeview is

25 || in the next. part. "consisting of-an internal CIA audit and. a
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report to the oversight Committee, the CIA shall report," and

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report to the oversight committee as well as such independent

GAO audits as the committee shall direct. As part of its

i

annual report to ‘the oversight Committee" --- "As part of its
then the rest of ‘the sentence, “all its intercessions on :
behalf of its proprietaries." | |

Myr. Aaron. “May I just make a quick editorial fix? "The
Committee recommends the overight Committee conduct an. annual
review of all proprietaries consisting of an internal CIA
audit and report to the oversight Committee."

Mr. Kirbow. No, the Committee cannot conduct a GAO
audit. They can insist that that's part of the report that-is |’
presented to it. — | — |

Mr. Aaron. | That's it, consisting of a report to the over-
sight Committee of an internal CIA audit, is that rigt? |

Mr. Kirbow. "What you are trying to do is to require

the CIA to reveiw it, to conduct a CIA audit, and to report

fully all of the review entailed.

Mr. diGenova. Not just the audit themselves. There are

certain operational details you are going. to want, to know about

also, not just financial security.

Mr. Kirbow. Mr. Chairman, let us rewrite that one. We
will include it. |

Senator Huddleston. “Well, you see, you could combine
dvand 2 together, ‘since we are just going to use one sentence,

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the first sentence in. No. 1, and after we say the external

internal CIA audit and all intercessions that the CIA may have

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is the budget presentation that's being. referred to under _-

this. .

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and:internal controls, the oversight committee should require a

annual report of all proprietaries by the CIA, including an

made on behalf of proprietaries.

‘Mr, diGenovat That's it, that's all in‘one sentence. We
can fix that. |

Mr. Aarons. All right. We'll take Joe's fix.

Mr. Kirbow. In three I am not sure what you mean,.."In’ the
DCI's budget presentation." That almost. has a word: of art

connotation in the Senate... A budget presentation is. that

%

thing which the Secretary of Defense and the Director ‘of the
CIA makes to the Appropriations Committee.
Mr. G@iGenova. We are talking about an authorization,

aren't we, an annual. authorization here?

‘Mr. -Inderfurth. Look on. page 26 and you'll see the
definition of that under (b). The DCI. shall have responsibilit
for preparing the budget of the national intelligence program

for presentation. to. the President and the Congress. This

Mr. Kirbow. Well, now you come _to the real question,
proprietaries being listed in | the DCI's budget presentation.
Most of. his proprietaries neither use any money up nor make

any money or anything. They are just shelf items.
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‘as a line item, for example.

to know, even though this is not going to be published, where ©

TOP SecRey ae

Here again you come to the’ notional.

Mr. diGenova. No, no, Charles, because: the point they
made during our review out there was that never have the
proprietaries appeared in the budget presentation. They have

been hidden, and the object is to identify them in the: budget.

Mr. Maxwell. One suggestion might be, be listed, that
implies a list of proprietaries.

Senator Huddleston. Where does this list go?

Mr. Kirbow. What you want to do is to require them to
include a discussion of the proprietaries in his annual report

to the oversight committee is what you want to do, isn't

it, because they don't have that now. They don't report to"

the Armed services:Committee. They only report to -Appropriatio s.
Senator Huddleston. “How would it be listed in the budget:

under your proposition here, Joe? . |
Mr. diGenova. Well, I'm just assuming == well, I am

assuming in terms of oversight the Committee is going to want

this money is. going and what it is going to’be used for,
if they are going to authorize it.
Mr. Aaron. I think the term really should be --
Mr. Kirbow. I think it ought to be more than in the
budget. |
Mr. diGenova. I know that's. not™ just what. they are going

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to. be asking, but the thrust of this was to’ make sure that
proprietaries found their way’ -into the budget, and that senators
knew what they were authorizing when they authorized the budget.

Now, how it gets in there, I am not a budget: expert.

Mr. Kirbow. That is what I am trying to supply here becaus
in this process there is a procedure that when you say there shal
be authorizing legislation, where the line items are discussed.
before the authorizing committee and not before the budget -
committee, which is the appropriations committee, and if you
require that he discuss or report the annual operation of the
proprietaries in his annual report to the oversight committee,
you will accomplish what: you are trying to dao, and not exciude
it only for the presentation before the Appropriations Committe

Mr. Maxwell. Could I try a fix on this?

Mr. diGenova. You are invited. |

Mr. Maxwell. The oversight committee should require that

and the oversight committee_include a specific discussion of .
the financial aspects of CIA proprietaries. I mean, we are
trying to bring them out and see what the impact is on the
budget, where do they. fit in.
Senator Huddleston. can they do that, though, without
identifying the proprietary and where it is located and whateve
Mr. diGenova. They have indicatea they could.

Mr. Aaron. “Jim, Taylor, when he was. here talking to the
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1. Committee, talked about how they are beginning to -- drawing:a
2 | way to work in the proprietaries so that they can both identify
3 || them and indicate their cash flow implications for the budget,

4 |'and in effect --

5 _ Senator Huddleston. What would you have proprietaries --
6 7 Mr. Aaron. Proprietaries, income and outgo.

9 . Mr. Kirbow. But that would never be published, Senator.

8 (If you want to accomplish what you are suggesting here,

9 that they report the cash status or the financial status, you
“10 add that additional sentence to this combined 1 and 2 up here
qd that the Senator just proposed a minute ago, and indicate that

12 || that report should also include the financial status or the -- |:

13 Senator Huddleston. But you do that with the audit, don't
14 you, the internal audit? . .
15 . Mr. Kirbow.. Well, in fact you do, in’fact you do.

16 Mr. Aaron. Well, I think. the. point -- maybe I*m not
W captioning this properly, Joe, but I think the point here is
1g | that proprietaries either earn money or cost money, sometimes
19 a little of both, and it has an impact, therefore, on the
ag |) overall CIA budget, particularly in the past when income from
21 ‘the proprietaries could be placed in either the contingency —
-p2 || Feserve or used to finance, in effect, operational purposes
| 23. of the proprietary. In other words, Air America was earning
-_ , 24 || Money on its operations, and yet it was costing them more

25 because they were engaged in certain risky operations. In
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‘would include the cost of some of their operational purposes.

of its sort of macrobudget implications in terms of up or down, |

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TOP SECRET © |

In effect, the proprietary was earning money which was
financing the proprietary organization. . |

Mr. Kirbow. But they can no longer do that. What they
earn now must go into the general Treasury. |

Mr. Aaron. No, gross earnings do not go into the general

Treasury. Their net, and part of the cost of doing business

I think the point of this inclusion here was to see if
one could require in connection with the budget, not just in

general, with an audit of what it-does specifically, but in

terms of the entire activity of the CIA, to get a spelling out 2

and secondly, its budget implications for the certain categorie
of operations which were involved, such as, if you are talking»
about the conduct of the support for the activities in Laos.
Mr. diGenova. Paramilitary operations. |

_ .Mr. Kirbow. Well, leave it like it is if that is what’ you
are trying to do, because they will be sure to, report it-to
the Appropriations Committee in excruciating detail, but they
won't report it to the authorization committee unless they ©
require it to get money. | |

. So if you want to leave it a detailed budget, their

presentation to the budget committee, , this language will get
that done. _ |

7 Senator Huddleston. Well, what if you said something like}

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this, furthermore, or adding to that, the fiscal impact or
the budgetary impact of the proprietaries should be included
or defined in the DCI's budget presentation.

Mr. Maxwell. Specifically discussed?

Mr, diGenova. That language would mean it's included in
his presentation in some way because the allusion that David |
made to Jim Taylor is that they are beginning to put it into
their budget presentation. I know ‘that is a term of art.

Senator Huddleston. | That eliminates any idea of listing
them. | _ |

Mr. diGenova. “Elliot's point also about the authorization |:
committee should be added in there. |

Senator Huddleston. We've got so much money invested,
and 33 money made money and 40 made money for a net gain of
so and so.

| Mr. Maxwell. And you should have some notion of that
and the problem was that you weren't able to get ahold of it.

Senator Huddleston. And we sold two or three of them for
this amount. | |

“Mr. diGenova. That is the whole issue of their visibility
in the budget, the whole question. |

Senator Huddleston. Well, where does that visibility

disappear?

Mr. diGenova. Well, before they never showed. up.

. Mr. Maxwell. Before you had the. covert: action.
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g || with that at this point trying to define it properly and how

9 it should be presented... I mean, I really don! t - think we know.

10 | They have an intention to do it-because they recognize that--

Senator Huddleston. Well, ‘where Wilh. it disappear.

Mr. Aaron. Proprietaries as a category?

Mr.

Mr.

2 Mow? It. won't come to the authorization committee and the

3 ||) appropriations committee. I mean, it won't be a line item.

Maxwell.

6 | of operational support in covert action.

‘Aaron. Not necessarily. I think. they. are struggling

ll potentially it is a source of real question as to how much
12 || Money is being spent, on clandestinc activities that is self~

13 || generated by the Agency because of its proprietary

14 || activities.

15

16 the Committee had looked at this broadly, was aware of possible
7 budget and authorization implications of various entities,

18 including proprietaries, and that it wanted to Say something

20

- gl just worried about if you say you expose proprietaries too: much,|.

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’-Mr.

ig about that.

Senator Huddleston. Well, I will agree with that. I am

Mr.

Mr.

'. My.

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diGenova.

22 you are exposing cover.

Aaron. Well, this is internal.. This is classified.

diGenova.

Maxwell.

65

It was not necessarily anything dramatic.

TOP SECRET 62

I would assume it is going to be a subsection

The impact, Senator, was also to show that

“This is not public.

Well, I think the language the Senator
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suggested got to that.

Mr. Aaron. Well, let me see if I can read out what I would
propose along the lines I think we discussed. |

The oversight committee should require that the fiscal
impact of proprietaries be made clear in the DCI's. budget
presentation to the oversight committee. “te you want to add
the appropriations committee, you can, . but I think the point is
that that happens. | |

Mr. Kirbow. If you'll listen just one minute, Mr. Miller

knows and I believe the Senator knows that "in the Senate there

is a formal budget presentation: *:. made to the Appropriations :

Committees." They are not made elsewyere. Reports are made

to oversight committees on the status and all of these other

things, and if they request any money for those proprietaries,

they would request that before the authorizing committee. If

you are just trying: to accomplish getting it made known to the

oversight committee, drop the word "budget presentation" and
adopt the common usage of the annual report of the Agency or
of the DCI. | Oo

| -But that is kind of a word of art. Those are words of

art in the Senate, and they will seize on it because today

they don't de it for anybody else but the Appropriations

Committee.
Senator Huddleston. I think that's reasonable..enough. —

It ought to be clear,
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way this reads, I would have or would be opposed to it because

TP SECRET 64

_Mr. Aaron. Let me try another fix here because I'm

not too_sure.

The oversight committee shall require the fiscal impact of
proprietaries in the CIA's budget be made clear in the Director'
authorization presentation, or what phrase is that? In the |
Director's what? . |

Mr. Kirbow. — The pet's annual report to the appropriate
oversight committee. | |

Senator Huddleston. The DCI's annual report. _

Mr. Kirbow. The Agency would not report separately... They.

to the appropriate oversight committee.

Mr. Maxwell. While we are on that, could I, on No.. 6, -we
have already, I thought, by statute prevented any covert action
being funded other than by (a) appropriation to a covert action
budget; or (b) the contingency reserve.

Mr. diGenova. That's right.

Mx. Maxwell. D oes that make No. 6 redundant?

Mr. Kirbow. Yes. | |

Senator Huddleston. ' The only comment I would make is.
that the other is not an accomplished fact yet. This might
be accepted and that might not. | | |

Mr. Maxwell. Well, the reason I say that is that the

it provides an exception with the approval of the gersight

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1 committees, when we want, I think, to be able to go to the

re ' 9 | Congress and say, we recommend most strenuously that only these |
3 || two methods be used for funding, rather than providing a third
4 || method. and someone says, well, maybe we- should have a fourth |
5 || method, and I would like to go with the strongest possible
6 recommendation in regard to the earlier statutory requirement
q | that it only be by specific ppropriation to. covert action and
8 | the contingency reserve fund. |
9 Mr. Kirbow. Otherwise, Mr. Chairman, we will stand a ;
10 || chance of getting the other’ amended,. to allow. the: oversight.
ia | committee. to allow it.
12 Mr. diGenova. Why don't we say this by statute, and then |
a 13 have the rest of the sentence an addendum which would just
14 allude to the fact that funding is to be accomplished to the
15 || method we set out if you want to eliminate it.
16 |: Well, this was the problem that was raised, or an issue
17 that was, raised during the study, and this is set in here
18 for that reason. It can easily be removed if it is inconsisten
19 with another recommendation of ‘the Committee.
20 . Mr. Aaron. Well, we have two or three different earlier.
21 provisions that relate to this. The first is that re-
202 programming authority, defining reprogramming authority, the
23 possibility that something used. for a program covert action Xx
ae 2A which involves a proprietary that generates a certain amount

95 || of money, can be used for program Yo:

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66—

1 | The second issue is we have proposed that covert actions

2 ||}be funded either by line item or by the contingency reserve.
3 The third thing we proposed is that the contingency reservel

4-i\be replenished, if I am correct, only by appropriation, concur-

5 | rence of the oversight Committee.
6 47 _ Now, what this in effect does, I think the question er Be
7 ll he's driving at is, what do you do with the profits. of a.

8 proprietary organization? ‘Can you put it in the contingency
9g || reserve?

10 ‘If so, our other recommendation would pick up the notion

11 ‘that it can only be done with the concurrence of the Committee. |
12. = Is there some other purpose, direct transfer? Well, :
C : 413 presumably one of the limitations on reprogramming _- and this
14 would be a fair point .to make -here, as part of its definition
15. of limitations on reprogramming, ait is recommended that the
16 || oversight committee proscribe the allocation of profits from
17 | any proprietary to a covert operation without their express
1g || consent. And this is really kind of -- if it doesn't go. throug
19 the contingency reserve, it really goes to the question of
20. reprogramming, |
21 | Now, I realize that we have said that our other recommen-:
29. dation by implication would prohibit this, but it is only by
23 | implication, I would. think. | |
“Y | 24 Mr. Maxwell. My sense is that by providing this --

25 ' Mr. Aaron. You kind of create a channel. —
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yet.

1s there is a covert operation. it is a secret operation at the

replenish the contingency reserve or to operate a covert or

TOP SECRET |
Mr. Maxwell. ‘It's not that you create a channel, but you

to generate funds, and secondly, I think it is the easiest way
for the oversight committee to have a handle on covert action,
and particularly its funding, is to say there are two ways you

can do it. You can do‘it either by the regular appropriation

process, or you can do it through the contingency reserve fund. |.
But if you start to build in the ways that the contingency
reserve fund can be replenished, I think people -- I think ther
may be a loss of control. | |

Mr. Aaron. Well, this is a way it can be replenished,

and this is not prohibited by anything we have recommended ©

Mr. Maxwell. I understand that, but I guess I was trying
to clean up the organizational structure.
Mr. Kirbow. I think this is the problem with recommending

the legislation piecemeal, is that the insurance company out

agency conducted: in’ that manner;, and if you allow. only. .
covert operation: to be: ‘funded only from: the contingency
reserve, whatever ‘monies they generate will have to go back int

the general treasury because they cannot--be used to either

to perform a covert function or operation.

So they are not even -~ they can re not only use the. profit

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1 | to do that, they cannot use the general monies that they

~.

2 generate from that to conduct. They will have to fund that.
3 insurance program in the contingency reserve.
4 | Mr. diGenova. No, not at ail, because it is not a covert
5 . operation. That is -not being use to fund a covert operation.
6 It has been used to pay pensions and annuities to foreign .
7 ||/agents. It's not a covert operation.
8 Senator Huddleston. Agents are covert. If you restrict
9 | it to use of funds, ‘if it is not already done, no funds
10 | derived from the operations of proprietaries shall be used for
1i any other purpose except the operation of the proprietary and
12] any profits shall be returned to the general treasury.

) 13 It precludes it, doesn't it? —

14 Mr. Aaron. That would solve the problem, yes.
15 Mr. Kirbow. And that's what they are doing today. by ~

16 | regulation. |

17 ' Senator Huddleston. Can we say that?

18 Mr. Aaron. “I don't see why tot.

19 | Mr. diGenova..Well, we say that in our recommendation No.
' 90 Mr. Aaron. Well, this says --

“51 Mr, diGenova. . That deals with terminations and liqui-

22 || dations.
23 Mr. Aaron. This is liquidations, and terminations. This
Ve . 24 || is not just operations.

25 ' Mr, Maxwell. There is one problem, a slight problem. Tha
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1 || i8 that some of the profits are reinvested. It is not that they
‘ 2 take everything over or break even. |

3 Senator Huddleston. Well, I didn't say that. I said all
4 | funds not needed in the operation. | | |

5 Mr. Bader. Perhaps, Mr. Chairman, you could amend No. 4
5 ‘to all returns of funds or profits not needed for the operation.|
y . Mr. diGenova. There you go, whether from liquidations,
8 terminations or profits exceed for the needs of the operation
9 of the individual proprietaries should be remitted to the U.S.
1o ; Treasury.

11 Senator Huddleston. You can work that out so that it woul
- be understood that there is a need to keep a certain reserve

) 13 back. |
7 14 Mr. diGenova. We will unite 4 and 6.

45 Senator Huddleston. — That's all but 5.
16 | Mr. diGenova. 5 is only about the Department of Justice

. 1 being. notified as to the disposition.

1s Mr. Aaron. Now, we have two recommendations with respect ©
“19 to cover. The first is just to recommend that the Department o
20 || State stop. publishing data which makes it possible to identify
91 ‘people under cover,
7 Mr. Kirbow. Well, just a minute. On No. 5 I do have
23 || 4 question here.

\ - pa The Agency doesn't sign off on any other disposal of
25 United States properties and military bases or major edifices or
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1 | anything like that. ~
- | | a
2 Mr. diGenova. And the reason for that is every other
a government .agency is ‘subject. to the rules.and statutes of ‘the :!
4 Féderal Disposal ‘of Property Act, and the CIA isn't.
5 Mr. Kirbow. Do you see this could be an abuse area?
6 Mr. diGenova. I could see the Attorney General, if he |
7, knew that Admiral. Raborn or some other Director is putting
8 pressure on the CIA to dispose of a piece of property, would
9 want to know about that, since they are not subject to the
10 Federal Disposal of Property Act like every other government
11 || agency is. |
12 | _ o£ don't think == I think the record clearly shows, and
~ 13 || the General Counsel indicated that he was: not opposed to having
| 14 outside review of their disposals, provided .it was classified
15 or done ina classified way since: they have never had any
16 problem, |
10 Mr. Kirbow,. What you are doing here, approving the final
18 | disposition of disposal, if you are intending that he review
_ 19 the disposal process or participate in it, he wouldn't have. known
99 || about Raborn. He wouldn't have known about Raborn at all
91 because he didn't dispose of it to his client, and this would
22 not pick up that kind of abuse that you have discussed here. |
23 Mr. diGenova. Suppose it. had been disposed of to Admiral
“~ 24° Raborn, and they knew about it, and the AG said, why is this

25 being ‘done? It would raise a red flag which would not otherwis
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72h
be raised since the Federal Disposal of Property Act would not
have applied which would have flagged that legally. to any other:.
agency.

Mr. Aaron. It would also strengthen the Agency's hand. to .
resist those Purposes, to just simply; say, hey, this has to be
signed out by the Attorney General. This isn't going to work.

It seems to me that what we do need here —

Mr. Kirbow. If what we are trying to do is get his
participation, just having him approve it doesn't get his
participation, I think we ought to put that in if that's what
we want to do.

Mr. diGenova. I think the word “approve” is «wrong. te i

should be "participate." The sale or disposition of any CIA

proprietary “-
. Senator Huddleston. | How are you going to make it "partici-
nate?"
Mr. diGenova. I think the word we want is "consultation."
senator Huddleston. I think what-we are trying to do is
replace what other agencies have to do in an overt: way and:
under a specific law, which this agency is not under, so it willl

have some assurance that it is being done in a. proper way.
Mr.. Kirbow.. T ‘don't | disagree with the AG being in on the
act, but this one gets. /you participation on. Aisposition,

Senator Huddleston. Well, figure a way to. get it done.

Mr... Aaron. Well, what I wanted to say was I would like to.
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| requirement for CIA, or for the AG participation.

, we decide to delete the opening -paragraph?.

is in brackets. Recommendation (a), that the CIA make a

TOP SECRET r2

note that back on page 67 where we have struck out the reference
to Mr. Raborn and intend to expand on the pressures having
been brought to bear, part of that expansion should include

a statement’ that there is no -- or that the Federal Disposal
of Property Act does not apply to the. CIA, which is a crucial
aspect. |

Mr. Kirbow. They are exempt, and then bring in.the

Mr. Aaron. And that includes that.
Mr. diGenova. So we will rewrite 5 to make it consultatio
| Ms .. Culbreath.. David, on. cover, may I just say,/didn't
co a
Mr. Aaron: You're right, you're right. -
- Ms. Culbreath. We were just going to list the recommen~
dations. |
Mr. diGenova. Yeah, we already said that.
Mr. ‘Aaron. NOw, we have a recommendation that the
CIA should make an effort to place a-greater proportion of its

officers abroad. under nonofficial cover, and that recommendatio

greater effort to place a greater proportion of its officers
abroad, “under: nonof ficial cover" is in brackets.
| Senator Huddleston. That relates to the Welch discussion. |
Mr. Aaron. It relates to the Welch discussion and it

relates to the difficulties and problems of official cover.
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abroad under nonofficial cover, and the: Agency does not see

you pay is you don't have a lot of operational freedom. You

‘|; have to work hard at your regular job and you don't do a whole

“point. t mean, we ought to wait until the staff director~

reservations about that in terms of its relationship to a

TeoP SECRET 73

Mr. Bader. How do you feel about this, Joe?
Mr. diGenova. This is a problem because just like the man
Says, cover is a relative thing. I don't think there is

anything wrong with saying that the CIA, that they should make

an effort to put -- really not much of a 2 recommendation -- shoul

make an effort to place a greater proportion of its officers |

that in this form, wouldn't view that as ; a bad thing. They thi
cover is, if it is deep and effective, is okay. They just say
well, their answer this way, well, you: know; you don' t do

much work under deep, nonofficial cover, and one of the prices

a

heck of a lot.

‘The recommendation, the way! it is phrased, is sort of a
push to them to see if. they. can find better ways. It also
probably tells them that maybe. they should use proprietaries
abroad a little more, which are very, very efficient, according
to Eric, according to both things, operations and cover.

Mr. Aaron, I think we have got to be careful on this

~

returns because I think he has a particular interest in this
suggestion, but we are talking about moving more people. into

unofficial cover. I would like to express my own persional

TAR Crener

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number of things that the Connittee has already decided to do.
| Senator Huddleston. We are eliminating a lot of cover.

Mr. _ Aaron. That's the first thing.

Now, the second thing -- and these are nonoffocial cover _
categories. The second. thing that we are doing is trying to
place somewhat greater authority in the hands of the ambassador
and the missions overseas to know what is going on. That is
something that they can do when it is in. their house. Its is

something ‘that's extremely difficult for them to do when it is

off in the forest someplace.

So it is -~ and as Joe just said, it looks like a recommen F
dation to use more proprietaries, in part because it is inf the
same section, but in reality because that is one of the ways
they might do it, ana T just wonder how much we have thought
through for ourselves where the balance of our recommendations
lie, particularly since most of the stuff is derived baSically

from operational experience anyway.

There was a period, toward the end of Mr. Bissell's

‘career;in the Agency, or maybe shortly thereafter, when they
began to try to put more people in unofficial cover, and it

wasn't a very good experience for them.

, Mr. Kirbow. David, how does the ambassador lose control,
whether it is official or unofficial, except that he has got
them in his compound? Itlis an official. government function

over which he has absolute control.

TAR Cremme

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‘anda hard place because we know the official cover is we cover

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iar SECKEL 7

Senator Huddleston. But if they keep coming to the
embassy to check with hin, they blow their cover, unless they do}
it by telephone. | . |

Mr. Kirbows Well, I don't think they should go to the
embassy at all. I think their contact should become covert.

Mr. diGenova. _Well, we're sort of caught between a rock

it best. .

Senator Huddleston. Well, maybe we could approach in
that one way is to ‘improve official covert.

Mr. Aaron. That is the one recommendation we make here,
but the Limits on that are very - -- they are ‘just structural,
like.. |

Senator Huddleston. It seems to me like we are in an
area that we know a lot less about than the people who are.
in the business.

Mr. Aaron:. That is sort of my feeling.

Mx. Kixbow. We are asking them to proscribe against

fugure is essential. in the trend. of that. time..
Senator Huddleston. Shoulda! t we say that the time has "

Be

come for a ‘whole review of cover to see whether \ or not they
ean find some better ways?
Mr. Maxwell. We might say that the first - ‘large scale

study in 48 and '49 of the Agency, done “by Mr. Dulles, among
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others, , recommended very strongly that, there be more unofficial
cover. — |

I think the. Agency has been under ‘considerable pressure
throughout its existence to do that, and as Joe pointed out
there are certain limits to what it has been. able to do.

- Senator Huddleston. Well, I think rather than suggest

what ought to be more or less official or. unofficial cover, the |’

, Whole:-matter ought to be studied innediately by the Agency, and

see if they can find some new ways consistent with all: the
restraints and prohibitions that the Committee has placed. upon
them. a | - Co , f
(General 1aughter.) —_
Senator Huddleston. All right, .where does that leave us -
here today as we close out today’ s session?

Mr. Kirbow. Mr. Chairman, might I suggest that in keeping
with an earlier discussion today, that because it is a summary
of findings as well as an introduction, that perhaps while
we are nice and fresh, tomorrow we might take up. the intro-

ductory section prepared by the Staff Director, so that if we

change it much, we’ either make the rest of our ~~

tion

7 Senator Huddleston. Have any of the other members seen it

at all, Bill? | |
Mr. Miller. Just Senator Mathias.

' Senator Huddleston. ALL right, do you want to meet at

10:00-o'clock in the morning?
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1 Mr. Aaron. Are we going to terminate now? .
2 W. Senator Huddleston. They've got a vote going and it's 5:10.
oo, Yt think we'd better. | |
a (Whereupon, at 5:10 o'clock pem., the Subcommittee
| recessed subject to the call of the Chair.)

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